Prepaid Credit Cards

Prepaid cards issued by banks and other government-regulated organizations are a new way for consumers to make payments and conduct other financial transactions.

There are plenty of situations where a prepaid card might be the most convenient choice, but be sure you understand the key terms and conditions BEFORE you buy. Ask these questions when you are considering a prepaid card:

• What are the possible fees associated with using the card?
• Where can the card be used (online, at ATMs, outside the U.S.)?

Reputable distributors of prepaid cards will give you the terms and conditions in writing or have them available on their website. If you don't understand how your card works, ask for help where you purchased it, from your employer (if it's a payroll card), or by contacting the customer service number on the card.

Payroll and General Purpose Spending Cards

• Payroll and General Purpose Spending Cards can be very useful for those who want to budget their money and for those who don't have a checking account or credit card.
• General Purpose Spending Cards, which may be purchased by consumers, typically charge a monthly maintenance fee and could charge additional fees for adding funds to the card and/or making purchases or getting cash.
• Payroll Cards are similar to General Purpose Spending Cards except that they are provided by employers in place of paychecks. Payroll Cards typically allow a certain number of ATM withdrawals without charge to the cardholder and usually do not assess fees for purchases.

While the federal government does not guarantee the same protections for all prepaid cards, many "branded" cards voluntarily carry protections that are the same as credit and debit cards. Cards with a major credit card brand logo provide consumer protections, such as replacing lost or stolen cards and re-crediting money after unauthorized use of the card. To obtain these benefits, you must follow the instructions for registering and activating your card. Be sure to record your card information, including the customer service telephone number on the back of the card, so you can get a replacement if yours is lost or stolen.

If you have a problem with a prepaid card, first contact the customer service number. If the problem still isn't resolved, you may want to file a complaint with the proper authorities:

• For cards issued by retailers, contact the FTC. You may also file a complaint with your local consumer protection office.
• For cards issued by national banks, contact the Comptroller of the Currency.